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G-7 Says Outlook `Weakened,' Warns on Currency Swings
By Simon Kennedy
Bloomberg.com

Submitted by
Eitai B.N. Aharon

April 11 (Bloomberg) -- Finance chiefs from the Group of Seven nations said the global economic slowdown may worsen amid an ``entrenched'' credit squeeze and signaled concern over the dollar's slide.

``Since our last meeting, there have been at times sharp fluctuations in major currencies, and we are concerned about their possible implications for economic and financial stability,'' the G-7's finance ministers and central bankers said in a statement after talks in Washington today.

The officials downgraded their outlook for the world economy from that of two months ago, blaming the U.S. housing recession, credit-market turmoil, commodity prices and inflation pressures. The dollar has lost 8 percent against the euro and 6 percent versus the yen since the G-7 last met in Tokyo in February.

``They're trying to discreetly throw a lifeline to the dollar,'' said Sophia Drossos, a currency strategist at Morgan Stanley in New York, who used to help manage the Federal Reserve's foreign-exchange holdings. ``Had they not said anything, the dollar would have resumed its sell-off. This acknowledges there has been increased volatility.''

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